Analysis. The head of the Democratic Party proposed a massive wealth redistribution to the next generation. ‘My dream is to keep young Italians in Italy.’ The right and the center-left are aligned against the proposal.

An inheritance tax in Italy? Even moderates are opposed

Enrico Letta is going to war on the estate tax front, proposing the payment of a “dowry” of €10,000 for all 18-year-olds, to be funded by taxing inheritances above €5 million. The proposal aims to take a little from the rentiers, the 1% of the richest, to support around 280,000 young people of the lower middle class, half of the total. It would help them pay for their studies, their rent or to start their own businesses.

However, the first reaction to this proposal was not positive—quite the contrary. Mario Draghi immediately shot it down: “We’ve never talked about it. But this is not the time to take money away from citizens, but to give them money instead. The economy is still in recession,” the premier said, unmoved. “Tax reform cannot be done piecemeal.”

The right-wingers were jubilant at this reaction. “In this circumstance as well, we are in full agreement with Prime Minister Draghi: if there’s one thing that Italy doesn’t need, it’s new taxes. Letta and the PD must drop it,” tweeted Matteo Salvini. Similar was the reaction from Forza Italia and Renzi’s party. And there was friendly fire coming from the PD itself, from the former group leader Andrea Marcucci, himself the scion of a very wealthy family: “On inheritances, I fully share the reaction of the premier.”

There was strong support for Letta from the PD’s left, and also from Nicola Fratoianni. The deputy secretary Giuseppe Provenzano explained that “the proposal of the Democratic Party was to give to young people, who have nothing or too little,” and responded to Draghi’s claims: “The inheritance tax exists in the most advanced countries. The IMF is proposing it. Biden is talking about it. Taxing those who are inheriting millions of euros is not ‘taking away,’ but giving back to society.”

Matteo Orfini also took a stand: “It’s curious that in Italy, it’s never the right time to redistribute wealth. Nor to give something back to young people. Letta did well to start the discussion.”

The PD leader, speaking on Thursday afternoon at a party initiative on young people and precariousness, doubled down: “The ‘dowry’ is a good way to go, we will keep going. And it’s important to finance it without creating more debt, because that would be a mockery against the young people. They’ve paid a very high price during COVID to protect the elderly.” And he added: “In exchange for the ‘dowry’ for 18-year-olds, I would be willing to come to an agreement even on the electoral law.”

It’s unlikely that the proposal could go ahead under this government. But at the PD, they are still satisfied that they threw down the gauntlet. “My dream is to keep young Italians in Italy. We must support those who cannot rely on the help of their families,” Letta stressed.

“The ‘dowry’ is an important starting point for a more comprehensive reflection: a tax system that shifted the burden from labor to rentiers would be more favorable to the new generations, for obvious reasons,” echoed the Minister of Labor, Andrea Orlando.

The leadership of the PD is stressing that in Italy, the tax rate on inheritances above €5 million is just 4%, while it is 45% in France and 30% in Germany. And their position is that loyalty to Draghi also includes “the duty to say what the country needs,” namely “to give back to young people.” “All over the world, the ruling classes have understood that redistribution is an instrument of social cohesion.” Accordingly, they’re giving assurance that the PD “will carry on its battles on social rights and civil rights, because this is what a great progressive party does.”

The other key issue the PD is fighting for is a stop to student internships which are unpaid and unrelated to the course of study. Internships that “are only covering up precariousness and exploitation must be banned and replaced by apprenticeships,” one of their bills reads.

The numbers say that in 2019, the number of student internships surpassed that of apprenticeship contracts. The PD proposal talks about “increasing the minimum wage” for apprenticeships and “full refund of contributions” when apprenticeships are converted into permanent work contracts.

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